insights (2006-50)

Whither the Empowerment Zone

Perhaps the time has come to stop playing the blame game where the failings of the city’s $25 million Empowerment Zone program are concerned.

Before getting to solutions, however, it needs to be understood that the problems with the conduct of the federally-funded program are far more extensive than those that have been the subject of so much bad publicity. Media attention has been focused on the vicissitudes of a small business loan component of the program and of the program’s overall governance by an unwieldy Partnership for Neighborhood Improvement.

But the loan program at least got implemented, however faltering it may have been in only committing $800,000 of the $4 million allocated to it and then sustaining high default rates before clamping down on its lending practices. And while PNI had overall responsibility for allocation of Empowerment Zone funds, it shouldn’t be blamed for implementation failures on the part of other entities to which it made the allocations.

The biggest culprit in this regard is the city administration. In 2004, PNI allocated $3 million to the city’s Department of Community Development for blighted property redevelopment ($1.9 million) and home repairs ($1.1 million) in low-income neighborhoods. Yet per a recent accounting to City Council, none of this money has been spent. And by most accounts no plan for doing so is yet in place.

The department’s embattled director Renee Kesler resigned last month, and responsibility for shoring it up has been placed under Deputy to the Mayor/Finance Director Larry Martin. Martin couldn’t be reached for comment, but the city’s Director of Communications Margie Nichols says, “We’re still trying to get our arms around it and figure out where we go from here so that we get the money where it needs to go as quickly as possible.” She goes on to acknowledge that, “We should have been paying more attention to the way all of this was administered.”

Complicating the picture is the fact that the city has other home repair, rehabilitation and blight remediation programs that are separately funded by the federal Department of Housing and Urban Development. Indeed, some $2 million a year in loans with forgiveness features goes out to low-income owners of sub-standard homes to cover the cost of bringing them up to code. But there are typically long waiting lists for those funds, and a key member of PNI’s board of directors, Whitney Stanley, is clear that more is needed.

“The need is overwhelming. That [Empowerment Zone] money could be spent in no time flat, and we need to get it out there,” Stanley asserts.

Where blighted properties are concerned, another sizeable sum is allotted for their acquisition by Knoxville’s Community Development Corp. and subsequent subsidization of the cost of dwellings built on them by non-profit Community Housing Development Organizations (CHDOs) that specialize in affordable housing.

Provision for 15 such houses on vacant lots in Lonsdale was one element of a Lonsdale Development Plan to which another $1.2 million in Empowerment Zone funding was allocated but remains unspent. The holdup in this case, however, has been a moratorium on new housing in Lonsdale pending adoption of design guidelines on which City Council is due to act later this month and which all concerned agree are needed.

The centerpiece of the Lonsdale Redevelopment Plan was due to be a neighborhood commercial center on Texas Avenue on which KCDC devoted a considerable planning effort. But when KCDC sought a developer for the center via an RFP, no responses were forthcoming. The concept for the center with a variety of retail service tenants emerged from a visioning process by an Empowerment Zone Advisory Committee (known as a ZAC). In assessing the outcome, KCDC’s president, Alvin Nance, observes, “It was fine for them to dream, but they never got to reality.” For all the enhancements of Lonsdale’s residential character resulting from KCDC’s $19 million renovation of Lonsdale Homes and prospective infill housing, he doesn’t foresee a commercial center becoming feasible anytime soon.

To be sure, PNI and its ZACs have met with success in some of their other allocations. A $1.5 million EZ grant was integral to getting the new Food City store that’s due to open in Mechanicsville next spring. And while he’s presently immersed in problem solving where the $4 million small business loan fund is concerned, Martin believes it can be successful in fostering inner city enterprise and job creation on a sound credit basis. As the former president of First Tennessee Bank, his judgment in such matters has to be respected.

Martin’s biggest challenge now is strengthening the management of the multi-faceted EZ program. Even neighborhood representatives on PNI’s hybrid board of directors have become clear that the organization’s executive director Terence Carter isn’t up to the task. So they aren’t likely to resist a move by Martin to vest control of the program in the city administration. But the deficiencies of its own Department of Community Development have been a big part of the problem. So Martin’s selection of its new leadership will be crucial.

At the same time, I believe the spirit of neighborhood involvement in the process on which the Empowerment Zone was founded and funded needs to be preserved. Hopefully, a Neighborhood Task Force appointed by Mayor Bill Haslam that includes such very able members as City Councilman Bob Becker and Whitney Stanley will come forth with recommendations on how best to do so.